Dish Network on Monday launched an unsolicited $25.5 billion cash and stock bid for Sprint Nextel to create a combined company that would be able to offer nationwide pay-TV and cellphone service.

The proposal competes against a pending merger between Sprint and Tokyo-based Softbank, which in October offered $20 billion for a 70 percent stake in the No. 3 U.S. wireless carrier.

Dish, the nation's third largest pay-TV provider, said its bid "represents superior value to Sprint shareholders." The proposal consists of $17.3 billion cash and $8.2 billion in stock, versus Softbank's offer of $12 billion in cash and $8 billion in investment capital.

In a letter to Sprint's board, Dish chairman Charlie Ergen highlighted the merged company's ability to provide services across platforms. Combined, they currently serve about 60 million cellphone and satellite-TV subscribers.

Advertisement

"Leveraging both companies' existing assets and expertise, we will be the only company able to offer a fully-integrated, nationwide bundle of in- and out-of-home video, broadband and voice services to meet rapidly evolving customer preferences," Ergen said.

On a conference call Monday, Ergen said the proposed merger with Sprint was the culmination of years of work. The satellite-TV provider spent about $4 billion in recent years acquiring wireless spectrum and related assets, with an eye toward expanding beyond its core business.

Ergen sees a looming marriage between the mobile phone and television set. Verizon and AT&T dominate on the mobile front, while the cable companies are the leaders in providing broadband to the home.

"There's really no one company on a national scale that puts it all together," Ergen said. "The new Dish-Sprint will do that."

In addition to bundling satellite-TV with cellphone service, the combined company would offer fixed broadband to the home.

Sprint shareholders would receive $7 per share, based on Dish's closing price Friday. This consists of $4.76 per share in cash and 0.05953 Dish shares per Sprint share. The deal would give Sprint shareholders a 32 percent stake in the new entity, versus 30 percent under the Softbank offer.

Sprint's 46 million subscribers represents about 17 million U.S. households that Dish will target with its video service.

Sprint's top differentiator against Verizon and AT&T is its ability to offer unlimited data. Cullen said the new company would allow subscribers to stream video to a laptop and "not worry about the data caps continuing to roll."

The proposed combination will create synergies and growth opportunities of about $37 billion, according to Dish. That includes an estimated $11 billion in cost savings.

Ergen said he's "more than happy" to pay the $600 million break-up fee tied to the Softbank deal.

In January, Dish offered to buy wireless network operator Clearwire, which is majority owned Sprint. The move was viewed as an effort to bring Sprint to the negotiating table. The company, however, had already reached a deal to acquire the rest of Clearwire.

Dish wants to enter the mobile broadband business but needs to partner with an existing carrier because of the costs associated with launching a network. Delays in receiving regulatory approvals tied to its spectrum also pushed Dish further behind Verizon and AT&T, which have rolled out nationwide 4G LTE networks.

Sprint's board of directors confirmed Monday it had received the proposal and planned a careful evaluation "consistent with its fiduciary and legal duties."